Thursday, April 30, 2009

Five pretty pictures

Internet infrastructure stocks are on a tear, indeed they are veritable "pitbulls on the pantleg of opportunity" following a set of strong Q1 results and broadly encouraging guidance. Bear in mind that if you view these charts after this writing - 30 April, 2009 - they may look very different, but what they show now is Akamai up 10% today, Savvis hanging tough after a 16% rise yesterday and having more than doubled since its March lows, Switch & Data has also doubled, Rackspace up 74% since early March, and Equinix up 68% since its own March nadir. I know a rising tide generally lifts all boats (NASDAQ up 41% over the same period), but these have gone airborne. We're back to "picks and shovels" here, but I think this time the market has it dead right.

The magic of flipping a light switch and escaping the dark is experienced at home, but the real magic takes place in an unseen power station miles away. The magic of Facebook actually happens in a number of deeply un-sexy, harshly-lit, sterile rooms with well-above-average air conditioning. Without the humble server jockey, tending his flock of racks, the code geeks got nothin'. Our dependence on web services of various flavors will inevitably intensify from here (especially if we end up working and studying more from home), and I would be very surprised if the critical infrastructure components of what the father of the internet, Senator Ted Stevens, once sagely called "a series of tubes", did not continue to grow strongly throughout this downturn and beyond. I think this pie could get very high indeed.

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